As Luck Would Have it

January 31, 2009 Leave a comment

As I was walking into work today, looking at the rabbit tracks in the snow, I noticed something familiar.  It was a $10 bill. I picked it up, shook off the snow and stuck it in my pocket.

What could I do with my newfound $10 bill?  Some people would buy a pack of cigarettes, some make-up or grab a bite to eat at McDonald’s.  I decided it would be best to apply my “windfall” towards my credit card debt instead of wasting it on something I wasn’t planning on buying anyways.

This leads to the question of what should be done if you suddenly find yourself with a sizeable amount of unexpected money.  What is the “right” thing to do with it?  Should you invest it, or pay down debt, or go and blow it on something nice for yourself?

The answer depends on what your goals are.  Some people would be happy to spend this money on a 52″ flat screen television.  Others would invest the entire amount into an Index Fund.  Others may donate their money to a charity which is important to them.

Here are some ideas of what you can do with any extra money that may come into your life:

1) Pay down your debt- Do you have a good reason not to?  I didn’t think so.  Just do it.

2) Start an Emergency Fund- Bad things will happen, be prepared.

3) Save & Invest- Start or fund an IRA.  It is never too early to start planning for retirement.  As a matter of fact, the earlier you start the better.

4) Enjoy yourself- There is no reason why you shouldn’t enjoy some of your new money, but be sure that you are putting the important things first.  A trip to Europe is probably not a great idea if you still have thousands of dollars in credit card debt.  Be smart.

There are as many different ways to spend money as there are people on this planet, however a little bit of planning will go a long way.  If you have plans for your life, finding ways to bring yourself closer to your goals will be easy.  The moral of the story is this:  A windfall has the potential to help move you closer to your goals, but only if you are prudent about the choices you make with that money.

Filed under Money

Get Out of Debt Quick! 6 Easy Steps to Financial Freedom

January 30, 2009 2 Comments

I have a plan!  One day, we will all be living debt-free, and we will scream from the mountaintops, “Free at last!  Free at last; thank God almighty we’re free at last!”

With the plan I am using now, I’ve cut my own consumer debt drastically.  By the end of February I will have paid off my last credit card.  Since really getting serious about getting my finances in order, I’ve paid off 2 maxed out credit cards, 1 maxed out furniture card, a debt-consolidation loan and I’ve began funding an emergency fund.

What is the plan, and what steps are required to be on your way to the mountaintop?

1) STOP SPENDING!- Some people recommend that you start somewhere else, like creating a budget.  Creating a budget isn’t going to do you any good if you aren’t able to get your spending under control.  You’ll create a budget, and it will end up in a stack of bills and be tossed out a month later as you finally decide to sort through your credit card statements which are now late.  If you don’t have self-discipline to keep it in your pants, your credit card I mean, no other step in this list will make any difference to you.  Until you can stop spending, stop reading this post, because it’s not for you.

2) Create a budget- Now is the time to get your budget made.  Figure out your monthly income, to the PENNY!  Do not include overtime, only your base salary.  People who set up a budget and include bonuses and overtime pay are setting themselves up for disaster.  You cannot count on this as regular income, so don’t include it.  Next, track your expenses.  Start with what matters most, where you live.  Without a home your life will become very uncomfortable.  Pay your rent or mortgage first and on time always.  I don’t want anyone living on the street because they failed to consider the obvious.

3) Cut expenses- Look at your bills, you know, the ones you put in your budget, and decide what is unnecessary “fluff”.  Cancel your expanded cable, while you’re at it, cut the cable altogether.  Eliminate your landline if you have a cell phone. Your local library; the big brick building on the corner where no one goes, has internet they will let you use for free.  Get rid of text messaging on your cell phone.  Fire the maid and clean your own house.  Cut out as much as you can without sacrificing basic needs such as heat, electricity and food.  Find cheaper alternatives to the food you purchase now.  That doesn’t mean Ramen noodles and Spaghetti-o’s.  Fresh produce and meat may seem more expensive, but I assure you, with some creativity, it is not only cheaper than prepackaged foods, it’s also healthier and much tastier.

4) Create an Emergency Fund- With all of the cutting of expenses you will find a lot of “extra” money in your budget.  Don’t go to the mall and buy yourself a new sweater.  Instead, stick that money into an emergency fund.  You don’t want to get caught with no savings when something happens because you will be forced to charge it to your credit card.  Get serious about saving.

5) Sell your stuff- I’m a big proponent of minimalist living.  I have been taking steps of my own to sell most of the stuff I own that is no longer important to me, or that which provides no value.  Have a gargage sale, sell things on eBay, donate to Goodwill.  Not only will selling your stuff bring in some extra money to pay down your debts, it will help create a less cluttered life.  The less ”stuff” you own, the less stress you will have in your life.  I know it sounds crazy, but it is true. 

6) Stick to it- This is going to be the most difficult step.  It is easy to start dieting, it is hard to stick with it.  The same applies to getting out of debt.  For a while you will feel amped up and ready to take on your debt headfirst, but after a while the enthusiasm wears off.  It gets boring.  Paying down debt sucks.  Allow yourself a reasonable amount of money to do something fun once in a while.  Go out to dinner or see a movie.  Get the Double Chocolate Chip Blended Cream from Starbucks.  Better yet, find something to do that is free. 

Simple, isn’t it?  So what are you waiting for?  The bills aren’t going to pay themselves.  I’ve layed the foundation, now go grab your tools and start building your financial future!

Seriously, get going!

Filed under Debt

Determination

January 29, 2009 Leave a comment

Iwo JimaA couple of years ago I packed my backpack with clothes, tossed it in the backseat of my car and hit the road with a good friend of mine.  We were off to see Washington, DC.  Neither of us had been there and we both thought it would be a great place to spend the weekend.  This would be my second “Suicide Mission”, a term I coined to describe a roadtrip over 1,000 miles one way, only a couple of days spent at where ever we were going, with limited funds. 

Sixteen hours of non-stop driving and we were there!

We stayed at a hostel located right in the heart of downtown.  We only had the weekend to see everything we wanted, so after a quick nap we struck out on the town.  It was already dark, so we didn’t get too far, but we were able to see the White House and began to familiarize ourselves with the area around our hostel.

The next day we began our adventure.  Our first stop was the National Archives to see the Declaration of Indendence.  After that we walked all over the Mall, seeing as much as we were able to; the Washington Monument, the Lincoln Memorial, the United States Capitol and everything in between.  We met up with a friend of mine who took us to Georgetown and introduced us to the Metro.  We ate lunch at the Watergate Hotel.

We spent an entire two days canvassing DC.  If it was a national monument, we were going to see it.  The last evening we were there we went to Arlington Cemetary to see the Tomb of the Unknown Soldier.  After that we headed over to John F. Kennedy’s Eternal Flame.

By now it was late and getting dark, but there was one more monument on our list; the Iwo Jima Memorial.  Both of us were exhausted.  We were tired and starting to get indignant.  Both of us wanted to see the monument, but my friend wasn’t feeling well.  I tried encouraging him but at that point it was no use. We’d spent more time walking than either of us ever had in our lives.  It was cold and it was dark.  We were ready to go home, but we had to see this monument, so off we went. 

After what felt like the longest walk of the trip, we eventually found the monument, and our excitment and energy returned.  We had successfully accomplished exactly what we set out to do.  We revelled in our success for a brief moment, the struck out again to find the nearest Metro station.

Upon returning home to Wisconsin, my friend found out that he was sick with pneumonia.  Despite his illness, he stuck to our plans.  Even when quitting would have been the easy thing to do, neither of us gave up and we will always remember that trip and especially the feeling of success when we finally made it to the Iwo Jima Memorial.  That’s determination.

Filed under Determination

Motivation

January 28, 2009 Leave a comment

We’ve all seen those cheap framed posters hanging in our boss’s office, the ones with the slogans about motivation, determination and leadership.  As silly as these posters seem to some people, for others this is all that is needed to give them a reminder of their values.  Certainly some of our supervisors and managers could spend a bit more time looking at these posters.

Unfortunately for me, it takes a bit more than a poster to get me going.  I’ve found that I operate much better when I have someone else to motivate me.  Even if it is something that I know I should be doing, like exercising, it is very difficult to get to the gym.

Motivation works the other way as well.  Being around people who are lazy and unambitious can cause you to be the same.  What can you do to keep your eyes on the prize and stay motivated?

Find a friend who you know motivates you.  If you have trouble getting out of bed to go to the gym, find a friend who works out regularly who wouldn’t mind having you tag along.  Knowing that someone is expecting you to show up at the gym will motivate you more, as keeping your word to that person is probably more important to you than getting on the Stair Master.

Be aware of those that cause you to stray from your ambitions.  Don’t abandon your friends, just be aware how they affect your personality.  If you are trying to get out of debt, don’t go to Best Buy with a friend who is a compulsive spender.  Try to eliminate moments of temptation.  Find other things you can do with this friend.  Take a walk to the park and toss around a Frisbee.  There are numerous activities in your community that won’t cost you a dime. 

Always try to keep your goals in the forefront of your mind, and act in a way which is conducive to achieving those goals.  Be aware of your weaknesses.  Look for help from people who are already doing whatever it is you want to do.  Expect to screw-up, but when you do, don’t throw in the towel, keep moving forward.  Forward progress is the only way towards success.

“Only as high as I reach can I grow, only as far as I seek can I go, only as deep as I look can I see, only as much as I dream can I be.”

     -Karen Ravn

Filed under Motivation

Goals & Relationships

January 27, 2009 Leave a comment

There are many factors in maintaining a healthy, loving and lasting relationship with your significant other; trust, honesty, fidelity and communication.  How many of us are in a relationship but aren’t sure what our girlfriend’s, boyfriend’s, husband’s or wive’s goals are?  An even bigger question might be, “Do our goals conflict?”

Sometimes goals are very personal and do not directly impact another person.  Some goals on the other hand may require huge life changes or taking a direction that your companion isn’t comfortable taking.  When conflicts like this arise, and likely they will, what can a person do?

First, talk to your partner.  Be direct, honest and open about why the goal is important to you.  Express yourself in a constructive way, don’t get defensive or accuse your partner of being unsupportive.  Maybe they just don’t understand your reason for wanting to do something.  It is possible that they are afraid and worry about your well-being.  Remember, they love you.

Second, listen to their feelings.  Not only listen to what they say, but really try to understand how they feel.  How would you feel if you were in their shoes?  Be honest.  Don’t just tell yourself you’d be supportive because that is what you want from them.

Third, come to an agreement.  Don’t try to win an arguement, instead, find compromise.  Getting your way at the expense of your partner’s feelings will only damage the relationship.  Try to find a solution that works for both of you.

Mutual Goals

Relationships can be strengthened through sharing common goals.  Maybe the goal is going to Hawaii next winter, or working together to remodel the upstairs bathroom.  Maybe the goal is to become debt-free.  Whatever the goal, having something to work on together forms strong emotional bonds in relationships.

Even with mutual goals, it is important to communicate openly and honestly with your partner about those goals.  There may be lingering uncertainty and open and honest dialogue will help to resolve any anxiety your partner may have. 

Talk to your partner, share your dreams and walk through life hand in hand accomplishing everything you desire in life.  Life is more fun when there is someone to share the joy of success, and much easier when they are there to offer support and motivation when the goal seems impossible.

“Soul-mates are people who bring out the best in you. They are not perfect but are always perfect for you.”

     -Author Unknown

Filed under Goals, Relationships

Finding Your Path

January 26, 2009 Leave a comment

I’m sure everyone remembers when they were in grade school being asked “What do you want to be when you grow up?”  I felt like I was the only child in the room who didn’t have a clue.  In high school I remember the kids talking about going to college.  They would ask each other, “What’s your major going to be?”  I wouldn’t be going to college, I had enough of school.

After graduating I started working in retail earning a low wage.  I still wasn’t sure what I wanted out of life.  I continued working at this job even though I was struggling to get by.  I didn’t have the motivation to push myself to do anything better.  I didn’t have a plan.  I thought that this was what life would be like for me.  I was coasting through life with no clear focus about what was important to me or what I should be doing.  I was letting life kick me around.

It wasn’t until I had my life turned upside down that I realized that my “plan” wasn’t working for me.  I found myself completely broke with a low paying job, drowning in consumer debt.  I felt that I would be stuck in low paying retail work for the rest of my life, always struggling to pay the bills and make rent.  I needed a change.

I enrolled in community college and began my education.  I quit my retail job for a higher paying job.  I was on my way to better things.  I was at the beginning of my journey and though I still wasn’t sure where it would lead, I knew that I had to start somewhere. 

Sometimes we find ourselves in bad situations.  We feel like we are stuck.  We think that there is nothing that we can do to change our stations in life.  Had I not had my “comfortable” life turned upside down, I might still be doing the same thing that I was doing back then, even though it wasn’t working for me.  I knew it wasn’t working for me, but I was complacent.  I felt like this was the hand that life had dealt to me.  I didn’t realize that the life I had was the life I chose for myself.  Every choice I made had lead me to that point and it wasn’t anyone else’s fault.  I also didn’t realize that I was the only person who could change my life.

The journey of life isn’t always a walk in the park, sometimes it can feel more like a walking in a dark cave.  Remember this, life is whatever you make it.  You have all of the control to be rich or poor, healthy or sick, fat or slim.  Life is the result of your actions or inactions and of the choices you make.  Don’t settle for less than your true potential.

Filed under Goals, Potential, Prioritizing

Getting There From Here- How to Acheive Your Goals

January 25, 2009 1 Comment

Thinking about all of the things you want to do in life can be exciting.  You imagine yourself laying on the beach in Aruba or visiting Stonehenge, the pyramids, the Great Wall.  You imagine a life working for a company you have true passion for, your own company, or volunteering for a cause that is important to you.  You imagine a life which you know can be infinately better than the one you have now…

It goes no further than that.  Imagination.

Instead of saying to ourselves “I can do that if I try,” we say, “I wish.”  Just a passing daydream.  We are the first person to tell ourselves that “No, you can’t do that.”  “It’s crazy.” “It’s too hard.”  We have a constant inner-dialogue of self-defeating phrases.  The first step to accomplishing your goals is to convince yourself that anything is possible, you just need to figure out how you are going to get there from here.

If you want to climb a mountain, get off of the couch and start exercising.  I promise you, even if you someday find yourself at the bottom of a mountain, but haven’t prepared for the journey to the top, you will stay at the bottom of that mountain, wishing your life away.  Wishing isn’t going to cut it.  You need a plan.

After you get past the inner-dialogue of self-defeat there are some steps you can take in order to get your plan in motion.  The first is to define exactly what your goal is.  Be specific!  If you want to climb a mountain, which mountain?  Mount Whitney.  Okay, you live in Kansas, how are you going to get there?  Drive.  Do you have the appropriate gear you need to climb Mount Whitney?  You’re not sure?  Figure it out.

As you can see, once you’ve defined your goal, there are many hurdles that stand before you and successful completion of your goal.  Don’t be discouraged, hurdles are meant to be jumped over.  Just one problem, if you’re lying down, you’re not moving any closer to these hurdles.  You can’t expect to succeed if you do nothing to work towards your goal.  There is work involved.

The next step is to set a deadline.  You know that Mount Whitney is located in California, you know that you don’t need any special equipment to climb to the top.  You need to figure out when you are going to do it.  Set a date that works for you, and not 10 years from now.  Do it soon, while you’ve still got the burning desire inside of you.   Setting a deadline helps eliminate the mindset of “I’ll get around to it someday.”  It creates a clear timeframe in which you have to hammer out the details, resolve any doubts and to share your goals with another person.

Sharing your goals with someone else is an important step on your path to success.  When you tell someone else what you intend to do, you are more likely to follow-through with those plans.  You hold yourself more accountable.  Better yet, include someone else in your plan.  Wouldn’t your best friend want to climb Mount Whitney with you?  Share your excitment about it.  Passion is contagious!  Your best friend might not ever have given any thought of climbing the highest peak in the continental United States, but after you get done sharing your goal with them, they will wonder why they never thought of it!

You are well on your way to success, but until you have actually succeeded there are plenty of chances for failure.  Remember that just wishing won’t get you anywhere.  You need to do something.  Find a way to work towards your goal everyday.  If you aren’t in the best of shape and you want to see the view from the top of the mountain, exercise regularly.  It brings you that much closer to the goal, and it keeps the goal fresh in your mind.

Achieving your goals is simple.  It may not always be easy, but you can do it if you believe you can, and you are working towards success.  Dream on, but have a plan, and put that plan to action, or your goals will simply be just another daydream.

“Give me a stock clerk with a goal and I’ll give you a man who will make history. Give me a man with no goals and I’ll give you a stock clerk.”

     -J.C. Penney

Filed under Goals

Stupid is as Stupid Does

January 25, 2009 3 Comments

Einstein defined insanity as “doing the same thing over and over again and expecting different results.”  Are we all insane? 

While it may be much easier to blame it on insanity, many of us are just plain stupid.  I am as guilty as anyone of being stupid.  I have had to learn some money lessons the hard way. 

High Interest Loans

When I turned 18 I decided that it was time to become an adult and “build my credit”.  I went to the local banks and tried to get a loan for a new computer; and why not?  I had a part-time job washing dishes at a local restaurant and it wasn’t like I was asking for a lot.  Each bank I applied at told me the same thing, “You need a co-signer,”

After searching long and hard, I found one of these coveted co-signers.  It was my bestfriend’s mom.  I promised her that I would take care of the payments and that she had nothing to worry about.  We signed papers, I walked out with a check, and I got that new computer!

I kept my word about keeping up on the payments.  I had made a promise.  What didn’t matter to me was the interest rate on the loan.  I was so blinded by desire for that computer that I would have done almost anything to get it.  I said almost.  I certainly wasn’t about to wait a while and save for it!  Turns out that the interest rate was a whopping 24%!!!  That was stupid!

Credit Cards

Some people use their cards responsibly, paying them off completely each month, earning cash back, frequent flier miles, points, etc.  Not me!  I got my first credit card and immediately went out and bought a 32″ television, a Playstation 2 and games to play on it!  I sure did feel good carrying all of that new stuff out of the store.  I got it home and set it up in my bedroom and played games constantly for a long time.  Then the bill came.  Now I had a loan payment for a computer and a credit card.  No sweat, I could make the minimum payment and still have money left to enjoy.  Life was good, what with all this new stuff I had.

Debt Consolidation

By now I was building my credit.  I was able to get yet another credit card, which was maxed out in no time.  And why not, I could pay the minimum payments.  Eventually, this pattern of spending caught up with me.  With the bills coming in and my desire to keep buying combined with a low paying job, there just wasn’t enough money left over to support my lifestyle.  I had to do something.  I went to the bank again and consolidated all of my debt into a new loan.  This time I didn’t need a co-signer, I was credit-worthy.  We extended the loan out a looooong time so that the payment wouldn’t cramp my style.

Back on Path

Or was I?  Now that I had lower monthly payments, surely I could afford to use my credit cards again.  Besides, I’d only charge what was needed and pay it off each month.  Yeah, right.  So there I was again, stuck in debt, this time totally unable to make payments.  Late fees, raised interest rates, bill collectors, and that credit score I so desired to build?  Trashed.  Good work!

Payday Lenders

Eventually my situation with money got so bad that I needed to use a payday lender service in order to make rent.  These places are the bottom of the barrel and feed off the broke and poor.  I knew this going in, but what choice did I have?  I had to keep up appearances and asking to borrow money would shatter the illusion that I was doing okay.  Each week I’d make payments on the loan, but by the end of the month, I’d have to roll the old loan into a new one so that I could make rent again.  I was on my way down.  I needed to do something, and fast!!!

How I Turned it all Around

Did I win the lottery?  Not even close.  I started working 2 jobs.  I cut my spending.  I did what I needed to do in order to turn things around.  I found a new job making a decent wage which allowed me to work overtime, and I worked A LOT of overtime.  At times I was putting in over 60 hours a week, but it was what I needed to do.  There wasn’t going to be someone to come along and make it all better.  I could only depend on myself.

Nearly 3 years after finding this new job, I have almost paid off all my credit cards, my loan is history and I’m able to put extra cash aside to buy the things I want.  I have funded an emergency fund, which I will continue to work on.

Lessons Learned?

So what has all of this taught me?  Certainly it must be that banks and credit card companies are evil…  No, it has taught me that I was stupid.  Had I been smart enough to consider the true cost of the things I was buying, I would have never charged any of it.  If I hadn’t been blinded by the desire to have a new computer, and trust me, I had “new stuff syndrome”, I could have saved a few months of my dishwashing money and just bought the computer.  That’s just not how things are done though.  When we want something, we don’t want to have to be inconvenienced by waiting until we can actually afford it!

And that is why so many of us are stuck in the pattern of debt that we are.  We owe a huge debt to the credit card company, but as long as we can make that minimum monthly payment, we are doing okay.  Never mind that we don’t have a dime in savings and if something happens, say Johnny gets sick, that it will break us apart.

The only solution is to stop spending!  I have made a promise to myself to control my spending and have pinpointed the areas where I spend most of my money; clothing and DVDs.  Once I found the leak, I stopped it.  I no longer buy DVDs, I rent and I have vowed not to buy new clothes for a year unless absolutely needed.

That’s my story.  I wish I could blame it on insanity, but I think we can all agree, it was just stupidity.

“Wise men talk because they have something to say; fools, because they have to say something.”
     -Plato

Filed under Debt, Life

Success

January 25, 2009 Leave a comment

Let me take you on a journey.  I promise, it won’t be far and I’ll have you home before dinner.  I’d like to take you to the other side of town.  You know, that part of town where the nice houses are.  The ones with shiny sports car sitting in the driveway. 

“If only I could be that successful” you say to yourself, losing yourself in thoughts of life in a big house, fast cars and more stuff than you could ever imagine.

Now let me challenge you.

We are taught that in order to be successful we must have “things”.  Shiny things, round things, big things, small things.  We are sold on the idea that stuff brings happiness.  The more stuff we have, the happier we are. 

I disagree.  A person is not successful because they own a brand-new sports car or live in a McMansion.

Success can only be measured by how satisfied a person is in their own life.  This is where defining goals comes in.  When there is a clear understanding of what a person values, iPhones, DVDs, designer clothes, Starbucks Grande Mocha-Latte all lose their importance and become an impediment to the goal.

Once I realized that the 350 DVDs that I had sitting around weren’t getting me any closer to what I hope to accomplish in life, I sold all but my absolute favorites.  No doubt that in time even more titles will lose their home in my collection.  I have another stack ready to go to the video store to be sold right now.

I used to collect action figures.  Not that I don’t still enjoy them, but because they are not contributing to my future goals, I’ve managed to sell off most of them, again, keeping only the ones that I get to enjoy daily in my display cabinet.  No longer do I have totes full of toys sitting in a storage unit.

I am constantly analyzing my possessions, finding even the smallest of things that do not provide value in my life anymore.  I sell what is of value on eBay, and donate the rest to Goodwill.  I do my best to keep what I can out of the garbage.  Save the Earth.

Think about what your goals are for your life.  Are your possessions in line with these goals?  If not, I know Goodwill will appreciate your donations.

“Simplicity is making the journey of this life with just baggage enough.”
     -Charles Dudley Warner

Filed under Minimalist Living, Success

Zero Credit Card Debt

January 25, 2009 Leave a comment

The first goal on my list of 100 is “Zero credit card debt”.  Personal finance will be a major theme of this website not only as I pursue this goal, but also as a I continue forward in pursuing my goals.  I am a strong believer that debt holds a person back from leading a free life.

When you are in debt, you are no longer working for yourself but are rather working for the banks.  The Bible (Proverbs 22:7) says that the borrower is servant to the lender.  While I don’t consider myself a spiritual person, I do think that a lesson can be learned from this.

I do not have excessive amounts of credit card debt, and I would no doubt be laughed at by many if I were to tell them exactly how much (or little, depending on how you look at it) credit card debt I have.  The point is not how much or how little, but how uncomfortable it makes you feel to have it hanging over your head.

I see debt as a hurdle to my future.  I am paying for my past.  In order to pursue goals, I need to be able to plan for the future, and paying for the past really places a burden on doing that.

Not only will I pay off my credit cards, but also the other debts in my life; my car and student loans.  I would say that “I HAVE A PLAN!” but in reality, I’ve been working that plan for a while now.  It is actually quite simple; Spend LESS than I earn.  That is the key to digging yourself out of debt.  Don’t live beyond your means.

If a person is focused on acheiving a goal, they will make sacrifices in order to accomplish that goal.  I have made some small “sacrifices”; no cell phone, basic cable, a small apartment.  After a while, these things no longer feel like sacrifices.  They are simply a means to an end.

“Those things which are precious are saved only by sacrifice.”
     David Kenyon Webstor

Filed under Credit Cards, Debt, Goals

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